We need action to allow consumers access to justice.
Credit: Nine Lives Media

We need action to allow consumers access to justice.

It's been a week, a long week, of further revelations and repercussions arising out of last week's excellent exposé of the Financial Ombudsman Service by the Nine Lives Media production for Channel 4's Dispatches.

We have waited a week for some accountability, some statement of how and when consumers can have confidence in the decisions of the FOS - but to date we have had somewhat of a deafening silence from the FOS, the Treasury, and the Government.

So what is the position of the ACC in relation to this issue?

For almost two years now our members, which amount to over 60 Claims Management Companies (CMCs) and who process over half of the current volume of financial claims in the system today, have identified a growing issue of consumer detriment being perpetuated by the decisions of the Financial Ombudsman Service (FOS).

Our members report to me that it is increasingly clear that there is a systemic, and seemingly conscious decision at that organisation to reduce the percentage of financial claims that are upheld in favour of the consumer. What we witnessed in last week’s edition of Dispatches clearly seems to suggest that our concerns were not without justification.

We spoke with the team behind that programme and provided them with a plethora of evidence that would suggest that consumers cases were not being decisioned correctly, and that the FOS were clearly, whether by political interference or a series of management and cultural failings within the organisation, denying consumers access to justice and making decisions that allow banks and other financial institutions to continue to profit from the scandals of mis-selling PPI and other products.

Remember that the then Managing Director of the (then) FSA, now the FCA, Martin Wheatley, said in a speech in September 2012 that ‘Incentive schemes on PPI were rotten to the core and made a bad problem worse.’, yet it has been the continuing failure of regulators to act in the interests of consumers that has led us to this situation today that we see. Our members have told me over the last 24 months that they increasingly have no confidence in the FOS and now it would seem that this view was correct.

What we want to see now is a swift and thorough investigation into what is going wrong at the FOS. We heard evidence of claims being ignored, post being left unopened and a system at breaking point. We know this is the case because our members see the evidence to support it every day in their inboxes and post.

That investigation must be independent of the FOS and must be carried out at the very highest level and must set a clear set of objectives that place the consumer at the forefront of any decisions that are made. It is not our members, nor is it banks and lenders who are important here – it is every single consumer who has had a rejection from the FOS, or who has yet to hear an outcome of their case that is paramount. Because, quite rightly I believe, every single consumer who has had a rejection, must question the validity of that decision based on the wealth of evidence we saw in the Dispatches programme.

This must not be a witch-hunt of ordinary FOS staff, but it must identify the structures, processes and systems put in place by senior management at the FOS that have led to such a state of affairs.

We, as a trade body for financial CMCs have a wealth of experience in claims management, and whilst every single case is different, we identified a number of trends where we felt consumers were being incorrectly told that their complaint was not being upheld. It is the reasoning behind this that we want investigated. When we see staff members on both Dispatches and in subsequent media coverage state that favouring upholding cases for banks and lenders was the ‘easier decision’ to hit a target, then we cannot stand by and allow this to happen any longer and nor should this Government and regulators.

I know that Nicky Morgan MP, Chair of the Treasury Select Committee (TSC) has written to Chief Ombudsman, Caroline Wayman seeking a full and frank set of answers from the issues raised and the ACC is clearly awaiting that response with some interest. We will be writing to Ms Morgan to provide her with some of the background we gave to Channel 4, and to present further evidence of FOS failings that are still coming to light every day since. It is clear that alongside a consumer-led inquiry into rejected and forgotten cases, there must be a full Inquiry from the TSC into how this has been allowed to happen, and, further to that, how it affect the decision by the Financial Conduct Authority (FCA) to impose a time-bar on PPI claims that will deny consumers access to justice in just around 18 months’ time. That decision clearly must be re-visited again in light of this new information.

We will lend our full support to any independent inquiry, or any Parliamentary inquiry into these matters, and we can certainly provide a wealth of evidence so that we can ensure that consumers, and in particular vulnerable consumers, do not lose out again and that those who were ripped off by banks and others are finally and fully compensated where relevant.

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